Rebuilding Sandy Survivors May Violate Federal Flood Insurance Rules

As more residents of the Jersey Shore receive funding to repair or rebuild their Sandy-damaged homes, the pace of construction is picking up in advance of the summer vacation season. But federal officials and flood insurance experts are worried that inconsistencies between state and federal construction standards mean some homeowners might rebuild in violation of key flood insurance regulations. That could lead to some nasty surprises after future storms -- or when selling properties. Some people may find they have to pay insurance surcharges or that they are ineligible for insurance at all.

Last December, FEMA sent a letter to the New Jersey Department of Environmental Protection, threatening harsh penalties if the inconsistencies aren’t fixed. But five months later, the state has yet to make the requested corrections.

State officials are downplaying the concerns, saying that local construction officials know the proper rules to follow. Experts familiar with the issue argue that’s not necessarily always the case. Though evidence of problems has yet to arise, they fear that issues are likely to crop up as the recovery continues.

The existence of state building rules that are out of compliance with the federal standards puts the onus on local officials to know just which regulations to follow. People like Dane Sprague, the construction official in Long Beach Township -- where over 1,500 homes sustained damage during Sandy. Sprague and his colleagues conduct inspections and issue permits, and they’ve been working pretty much non-stop in the year-and-a-half since the storm.

“There’s so much going on: Sandy-related repairs, new construction, house raises, that it just becomes part of the landscape,” he said recently, while pointing out several homes in various stages of construction. “It’s like the trees or telephone poles. You don’t necessarily notice each one as you go by.”

But notice them he must, since along with the building boom comes a host of rules he needs to make sure homeowners follow.

Another Layer of Complexity

“New Jersey is a very regulated state as far as construction goes,” he explained. “Obviously, when you get into a flood zone, that adds a whole new layer on top of the general building requirements.”

As in other barrier-island communities, all of Long Beach is in a flood zone, so residents have to adhere to a variety of detailed construction regulations.

For example, if they’re rebuilding in Velocity Zones -- the most vulnerable areas close to the ocean -- they’ll need to raise their homes on piers to comply with the new FEMA flood maps. The piers must remain unobstructed, and can only be covered with lightweight breakaway walls, which are designed to wash away during a severe storm without affecting the structural integrity of the building.

And according to National Flood Insurance Program requirements, the height of a home in a V Zone should be measured from its lowest horizontal structural member -- meaning the beams and floor joists -- to ensure compliance with the height requirements on the flood insurance maps.

Sprague said it’s important the rules are followed exactly as they’re written.

“If they’re telling you your first floor has to be eight foot high, and we say 'you only need to be seven foot high,' if we get a flood, none of those homes that are seven are going to be compliant with FEMA regulations,” he said. “So now you’re going to have a group of homes that are outside of help regarding flood insurance and regarding maybe some of the other state programs that crop up after a major storm like that too.”

Too Many Hats

While years of experience have helped Sprague to be well-versed in the regulations, knowing all the proper rules to follow can be complicated and confusing for some local officials, who may wear multiple hats and find themselves overtaxed in the aftermath of an event as large as Sandy.

“We know that a lot of local floodplain administrators haven’t had training,” said John Miller, legislative committee chair with the New Jersey Association for Floodplain Management. “They don’t know what their responsibilities are. There’s turnover in positions. There’s loss of knowledge when a turnover occurs,” he continued. “And we know that mistakes can be very costly, not only to the towns, but certainly to the homeowners.”

For example, said Bruce Bender -- an expert on flood insurance policies – a new or rebuilt home in an A Zone flood hazard area that has $200,000 in building coverage and $80,000 coverage for contents would cost roughly $1,700 per year to insure if it’s built at the correct, minimum height allowable on the FEMA flood maps. However, if that same home were incorrectly built just one foot below the height where floodwaters are expected to rise during a 100-year storm, the premium would rise to more than $5,000. A similar home in the V Zone – which is susceptible to three foot high breaking waves – would see its flood insurance premium jump from $8,600 to more than $11,500 if it were just one foot out of compliance.

In addition, homes in flood zones found to be built in violation of the rules could cause problems for homeowners years from now, when they try to sell their properties. And if repairs they make or reconstruction they do in the aftermath of Sandy are discovered to have been conducted incorrectly, they might have to spend substantially more to go back and fix those problems at a later date.

Given his concerns about potential confusion among local construction and floodplain officials, Miller was troubled when the New Jersey Department of Environmental Protection adopted language shortly after Sandy in its Flood Hazard Area Control Act that appeared to contradict several of the federal requirements, possibly fueling even more confusion.

For instance, the state rules fail to distinguish between building requirements in different types of flood zones; they permit a federally prohibited process known as “wet flood-proofing” in residential structures in the V Zone; and they allow officials to measure a home’s elevation in the V Zone by the height of its first floor rather than by its support beams.

The determination of exactly where construction officials take their measurements may seem trivial. But the difference between the top of a home’s first floor and its floor joists could be as much as two feet, so homes built in accordance with the state rules but out of compliance with the federal ones could end up costing homeowners significantly more to insure.
These inconsistencies also came to the attention of federal officials, who raised them as concerns during the state’s comment period early last year, prior to its adoption of the new rules. In response, the DEP wrote that it “did not, as part of this rulemaking, intend to compare the requirements of the Flood Hazard Area Control Act rules with the [National Flood Insurance Program] or attempt to fully achieve compliance with its standards. The purpose of this rulemaking is to facilitate the safe, efficient and sustainable recovery of New Jersey’s eastern waterfront, which withstood unprecedented damage from Superstorm Sandy.”

“FEMA deals with the entire country, and I know New Jersey sometimes thinks it’s special. And of course we’re special, but we’re no more special than any other state,” said Mark Mauriello, who served as Acting DEP Commissioner from 2008 to 2010. “There aren’t a lot of options in this. The federal government says, ‘We’re willing to have your communities participate in this great program that will help your communities be safer and that will insure structures in these flood-prone communities against those losses.’ These are important federal initiatives, and for the state to have kind of a laissez-faire attitude about it to me is really inappropriate,” he continued. “I can’t really understand it, but I think it just is another example of ‘We’ll do what we want, and to heck with everybody else.’”

To current DEP officials within the Christie administration, the issue has been blown entirely out of proportion. “I think what we’re talking about here is really almost like minutiae,” said spokesman Larry Hajna. “It’s significant, but at the same time, it’s not the end of the world.” He added that the problems are easily fixable, but said there’s really no reason to worry.

“We have two sets of rules that apply in New Jersey,” he explained. “Since all buildings in New Jersey’s flood hazard areas are subject to both the Flood Hazard Area Control Act rules and the Uniform Construction Code, the highest standard always prevails. So we’re confident that people are building to the appropriate elevations.”

NJ Spotlight filed records requests with a handful of shore towns and was unable to find any examples so far where local officials allowed construction that’s prohibited by the federal requirements. But as the Sandy recovery continues, Miller fears that asking local officials to compare various sets of rules and determine which one to follow will inevitably cause problems.

“The state of New Jersey and the region is getting a lot of money for disaster assistance, and some of this money’s being used in rebuilding,” he said. “We don’t want a case where federal dollars are being used on non-federally-compliant construction. And I think that would be a real sore issue with the federal government if they found that money was being spent improperly.”

Indeed, the Federal Emergency Management Agency continues to be worried about this very thing, so last fall it sent a letter to Trenton, threatening sanctions if New Jersey’s Flood Hazard Area Control Act rules aren’t rewritten. These could range from probation -- which would add a $50 surcharge to each resident’s flood insurance policy -- to suspension from the National Flood Insurance Program, which would make federal flood insurance unavailable and also limit some forms of federal disaster assistance.

That would make a lot of homeowners extremely unhappy, and it would also put the brakes on the coastal real estate market, since buyers of homes in flood zones that were suspended from the NFIP wouldn’t be able to obtain federally backed mortgages without being covered by flood insurance.

Of course everyone’s hoping to avert that. In his response to FEMA back in January, DEP Commissioner Bob Martin continued to argue that with two sets of rules -- one of which violates federal standards and one of which doesn’t -- the state is not technically out of compliance. But pressured to comply, he agreed that his agency would go back to the drawing board and review its regulations to ensure consistency.